Grab Youtube Screenshots and watermark them? (functions.php script inside!)

I already use a nice script which grabs me youtube screenshots with a CPT called “videos” and a field with the youtube id. what it does it calls the youtube image and saves it to the media library of WP and inserts the image as a featured image to the CPT:

/* GRAB YOUTUBE SCREENSHOT: */

function set_youtube_as_featured_image($post_id) { 
	$slug = 'videos';
	if ( $slug != $_POST['post_type'] ) {
        return;
    }
  if(  has_post_thumbnail($post_id) ) return;

  $ytid = get_post_meta($post_id, 'youtube_id', true);

  if ( $ytid ) {

    // getting thumb url from video url
    
    $youtube_thumb_url = 'http://i1.ytimg.com/vi/' . $ytid . '//cdn.dfactory.co/0.jpg';

    // download and save thumb
    $get = wp_remote_get( $youtube_thumb_url );
    $mime_type = wp_remote_retrieve_header( $get, 'content-type' );
    if ( ! substr_count($mime_type, 'image') ) return false;
    $name = 'youtube-thumb-post-' . $post_id . '.jpg';
    $bits = wp_upload_bits( $name, '', wp_remote_retrieve_body( $get ) );
    if ( $bits['error'] ) return false;

    // save attachment post, and setting as post thumbnails
    $thumb_data = array(
      'post_title'=> 'Youtube Preview', 'post_mime_type' => $mime_type
    );    
    $thumbnail_id  = wp_insert_attachment( $thumb_data, $bits['file'], $post_id );
    if ( $thumbnail_id ) {
      require_once(ABSPATH . 'wp-admin/includes/image.php');
      $metadata = wp_generate_attachment_metadata( $thumbnail_id, $bits['file'] );
      
      if (wp_update_attachment_metadata( $thumbnail_id,  $metadata )) {
		return update_post_meta($post_id, '_thumbnail_id', $thumbnail_id);
	  }
    }

  }
}

add_action('save_post', 'set_youtube_as_featured_image');

But the uploaded images don’t get watermarked!
Your Watermark Plugin just works as long as i go to media, select the images and apply the watermark.
but i like to have it automatically! you write, it should happen as long you use the default wordpress api functions. so i use them but the watermarking still does not work? what do i miss here?
Thank you!